When talking margins, shouldn't another important peice to the puzzle also be volumes? New business and changes in market share would surely have an affect on bank's profits no?

@Raf: the spreads might have widened considerably, & the graph might appear to prove this. But did you look at the fine-print footnote? "Figures exclude foreign currency funding, which accounts for approximately 30% of total registered bank funding at December 2008." Therefore the seizing up of the international credit markets & risk-averseness could change the "funding" picture totally.......

@Philly and Raf: it's the second part of that footnote that's more important: "NZD funding costs also exclude the impact of hedging, for example interest rate swap costs incurred against fixed rate claims." That's a huge omission - the banks' basic model is to borrow short, lend long, and hedge the duration mismatch. The data captures the fall in short-term rates, but not the offsetting losses on the swaps. In short, it's useless.

We've just had an interesting experience - due to our child starting school soon we've taken the plunge and are buying a house. I know that it's debatable as to whether now is a good time to purchase property or not, but we need a family home, we found a beautiful house at a good price, we can easily afford the repayments and so we decided to just go for it.

Anyway, my point is that I've been with Westpac forever. I have never been unemployed, have always earned significantly above average salary, carry no debt, no credit card and pay all my bills on time. I have savings with Westpac, insurance with Westpac - everything is with them. And to your point Philly, my wife thinks that Adele at Westpac is a gem.

So we asked them for a mortgage on a property that is just 2.5 times my annual wage - they said no. They require a sizeable deposit - we don't quite have enough, as we recently paid (cash) for an extended trip back to the UK to introduce our son to our family before he started school here in NZ.

Adele at Westpac was lovely and embarrased to decline us. So we went to Kiwibank, who looked at our numbers, gave us a big smile and approved the loan in 2 working days. Of course, we will now move everything across to Kiwibank, as I only want to deal with one bank.

How on earth are Westpac ever going to win me back as a customer? It's going to be nigh-on impossible, unless Kiwibank turn out to be a nightmare to deal with. So far however, they've been fantastic. The mortgage manager we spoke to indicated that they're currently flat-out doing mortgage approvals from people who had similar experiences with the larger, Australian banks. Strange - it seems a bit shortsighted.

Anyway, all's well that ends well. Even my wife's still happy. Because Robyn at Kiwibank also turns out to be lovely!

I don't know what the mix of Westpac's book is, Mozart, but it possible that they just plain don't want to lend anymore money out on NZ housing. Maybe they have a more definative answer to your question "..it's debatable as to whether now is a good time to purchase property or not."

Oh, also it's a two way street. Westpac easily beat Kiwibank for my 100 day T/D last week, and neither is my primary banker. Personally I'm happier with the banks doing the borrowing at the moment, rather than the lending. But that is only an emotional arguement, I know.

the new add from westpac showing the westpac worker in his westpac car giving the bird (or similar) to the hoon in his hoon car when he is broken down after previously racing off from the traffic lights irks me.

it is a firetruck you (without the iretr) kinda statement, that does nothing to make the bank look good even if they do drive hybrids.

are we just getting a closer cut of real life attitudes within the big 4?

We refinanced recently and had the opposite experience to Mozart. Westpac gave us a rate that matched the lowest in the market at that time (which was Kiwibank) without any pushing at all, and the Kiwibank mortgage manager took 3 days to return my call..... so we stayed with Westpac.

Maybe the Kiwibank man was too busy to cope. The problem with most of the bank staff now is that they have no authority. It used to be that the branch manager had authority to lend and to use discretion up to certain limits. Now it is not the case.

Wally - I was very surprised how easy it was. I was ready to haggle but there was no need. We do have 60% equity and 2 good incomes, so we are good customers for them.

Trev, perhaps it was different because you were re-financing rather than seeking a new home loan approval? With us Westpac didn't seem to have a problem matching rates, they were simply unwilling to lend if you couldn't stump up 20% deposit. I guess if you're re-financing and have significant equity that may be a consideration for them?

Miguel, we can confirm that Westpac don't offer 95% or 90% mortgages - as of last week anyway and not to us! We were in a slightly unique position too - the day after our offer on the house was accepted, 4 more unconditional cash offers came in. All were apparently significantly higher than our offer. I would have thought that this indicated a level of security - we clearly lucked out and payed less than the place is worth because the owners wanted a quick sale. Despite this, Westpac would not move their position. It just seemed as though there was no discretion available anywhere - a strict policy seemed to be in place.

You could be right Janet - they may well be picking that property is going to continue to slide in value over time. I still think that it will too. However it's bad business practise for them to apply a blanket rule based on generalisations. The market in general probably will continue to slide, but when you look at specific regions, even specific suburbs, the trends can be wildly different to each other.

Tonto, the answer surely is for the GE mortgage holders to organise themselves into a single body and then pull the plug on payments. That would get an instant reply.
Why this has not happened I do not know.

Mozart, I agree that Westpac is a dog of a bank to deal with. We were in a position where we had a pre-approval for 300k, no deposit needed as we had a existing property. The buggers backed out on the pre-approval, made us stump up a 15% of the new purchase price, wouldn't allow us to borrow against the equity (50%!!) in the flat we were living in to get it. We'd all signed up, they basicily gave us 3 days to arrange alternative finance if we didn't like it because they held off on their decision without any indication to us what they were up to. In the end we had to go thru with it because of the time-frame left to us. Then when we saw the mortgage documents, they had nicely added our existing flat as additional security to the new mortgage. We've both good, secure jobs with no other dept.
At the end of the day, the banks look after themselves. If you think they're going to look after you because you've banked with them for the last zillion years, think again. You're just a number. Now I learnt to treat them the same, no loyality here.